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Michigan Pre-Seed Capital Fund hits $11.6M in loans
Thursday, January 13, 2011
| Source:
Metromode
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The Michigan Pre-Seed Capital Fund, a part of the Michigan Microloan Fund, closed out 2010 with some big numbers, shelling out $2.5 million in microloans to Metro Detroit start-ups in 2010.
Each microloan is tailored to the needs of a start-up, averaging about $50,000. The loans provide cash (and validation) to companies in dire need of capital due to the financial crisis. More times than not, that money goes toward commercializing the startup's first product.
The Michigan Pre-Seed Capital Fund has provided this $11.6 million to 52 start-ups, such as
Innovative Surgical Solutions
, a Southfield-based start-up that made the finals of the
Accelerate Michigan Innovation Competition
. These firms employ 285 people and the microloans have helped them attract another $16.4 million in outside investment.
The future of the
Michigan Pre-Seed Capital Fund
is up in the air. Officials from the state of Michigan's 21st Century Jobs Fund have not yet decided whether to invest in the Michigan Pre-Seed Capital Fund this year. The first loans aren't due to be paid back until next year, so its future is in limbo for 2011.
The Michigan Microloan Fund was the first of its kind, proving quite popular. It inspired a number of similar-yet-smaller funds across Metro Detroit. However, those funds each measure about six figures in size and are focused on specific municipalities.
Skip Simms
, interim CEO of Ann Arbor SPARK and administrator of the Michigan Microloan Fund, believes these newer funds aren't big enough to make up for the potential loss of the Michigan Pre-Seed Capital Fund, which is by far
the largest of the funds in the
Ann Arbor SPARK
-run Michigan Microloan Fund
pool.
"They're not that large of funds," Simms says. "For instance, our $275,000 fund for Ann Arbor is a nice fund but the demand is 4-5 times that."
The smaller funds also aren't as flexible as the Michigan Pre-Seed Capital Fund. Each of those is specifically set up to provide financing to start-ups in specific municipalities. The Michigan Pre-Seed Capital Fund can make microloans to any in-state start-up.
Source: Skip Simms, interim CEO of Ann Arbor SPARK
Writer: Jon Zemke
Read more about Metro Detroit's growing entrepreneurial ecosystem at
SEMichiganStartup.com
.
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